Toshiba Corp. (6502), the world’s second-
largest maker of flash memory chips, cut its profit forecast 54
percent, citing a stronger yen, floods in Thailand and slowing
demand brought about by the debt crisis in Europe.

Net income may total 65 billion yen ($853 million) for the
year ending March 31, compared with Toshiba’s earlier estimate
of 140 billion yen, the Tokyo-based company said in a statement
today. That lagged behind the average 119 billion-yen profit
estimate of 21 analysts tracked by Bloomberg. Toshiba also cut
its sales forecast to 6.2 trillion yen from 7 trillion yen.

The maker of Regza televisions, aerospace components,
nuclear reactors and notebook computers cut production of
single-function chips last quarter because of the weakening
economies in the U.S. and Europe. Toshiba and other Japanese
exporters have been hurt as the yen strengthens against the
dollar and euro, reducing the value of repatriated revenue.

“The current severe situation may last a while,” said
Mitsushige Akino, who oversees $600 million at Ichiyoshi
Investment Management Co. in Tokyo. “It may take until July to
see a recovery for the flash memory market, if the U.S. economy
picks up and emerging countries maintain the current growth.”

Thai Factories

A stronger yen and the impact from Thailand’s worst floods
in almost 70 years contributed 40 billion yen each to lowering
the forecast operating profit, Makoto Kubo, executive vice
president at the company, told reporters in Tokyo. Toshiba
reduced its operating profit forecast 33 percent to 200 billion
yen for the year ending March, the company said.

Toshiba halted production at its 10 factories in Thailand
because of the floods. The company has so far reopened four
plants including one that makes washing machines so far, Keisuke
Ohmori, a spokesman, said today.

Toshiba based its earnings forecast on exchange rates of 77
yen against the dollar and 99 yen to the euro, revising them
from 85 yen and 115 yen, respectively.

TV Operating Loss

The company is reorganizing production of less-profitable
discrete semiconductors, which are used for single functions
such as transistors. The company will shut three factories that
make discrete chips in Japan and transfer about 1,700 workers by
the end of September, it said in November.

Toshiba had a loss of 10.6 billion yen in the three months
ended Dec. 31, compared with a profit of 12.4 billion yen, the
company said in a statement today.

Shipments of flat-panel televisions in Japan fell 59
percent last month, after the government subsidies expired,
Japan Electronics and Information Technology Industries
Association said on Jan. 25. Toshiba estimates an operating loss
of about 45 billion yen from its televisions business for the
full-year period, he said.